Item 1.01 Entry into a Material Definitive Agreement.
On December 7, 2020, TimkenSteel Corporation (the "Company") entered into
separate, privately negotiated exchange agreements (the "Exchange Agreements")
with a limited number of holders (collectively, the "Holders") of the Company's
currently outstanding 6.00% Convertible Senior Notes due 2021 (the "Existing
Convertible Notes"). Pursuant to the Exchange Agreements, the Company will
exchange $46,035,000 aggregate principal amount of Existing Convertible Notes
for $46,035,000 aggregate principal amount of its new 6.00% Convertible Senior
Notes due 2025 (the "New Convertible Notes"). The Company will not receive any
cash proceeds from the issuance of the New Convertible Notes.
The New Convertible Notes will be the Company's senior unsecured obligations and
will bear interest at a rate of 6.00% per annum, payable semi-annually in
arrears on June 1 and December 1 of each year, commencing on June 1, 2021. The
New Convertible Notes will be convertible at the option of holders in certain
circumstances and during certain periods into the Company's common shares (the
"Common Shares"), cash, or a combination thereof, at the Company's election. The
conversion rate will initially be 127.8119 Common Shares per $1,000 principal
amount of New Convertible Notes (equivalent to an initial conversion price of
approximately $7.82 per Common Share), subject to customary adjustments. In the
event of a make-whole fundamental change, the conversion rate will be increased
by a number of additional Common Shares for New Convertible Notes converted in
connection with such make-whole fundamental change to a maximum of 153.3742
Common Shares per $1,000 principal amount of New Convertible Notes, subject to
customary adjustments. The New Convertible Notes will mature on December 1,
2025, unless earlier repurchased or converted in accordance with their terms
prior to that date.
The New Convertible Notes will be issued pursuant to the provisions of an
indenture, dated May 31, 2016, as supplemented by a supplemental indenture to be
dated as of the closing, between the Company and U.S. Bank National Association,
as trustee. The transactions are subject to customary closing conditions and are
expected to close on December 15, 2020.
A copy of the Form of Exchange Agreement is attached hereto as Exhibit 10.1 and
is incorporated by reference into this Item 1.01.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information provided in Item 1.01 is incorporated by reference into this
Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities.
The information provided in Item 1.01 is incorporated by reference into this
Item 3.02. The New Convertible Notes will be issued in reliance upon the
exemption from registration provided by Section 4(a)(2) of the Securities Act of
1933 (the "Securities Act"). Each of the Investors is an accredited investor
(within the meaning of Rule 501 promulgated under the Securities Act) or a
qualified institutional buyer (as defined in Rule 144A under the Securities
Act). The issuance of any Common Shares upon conversion will be in reliance upon
Section 3(a)(9) of the Securities Act as exchanges solely with existing security
holders. Based on the initial maximum conversion rate of 153.3742 Common Shares
per $1,000 principal amount of New Convertible Notes, an aggregate maximum of
7,060,582 Common Shares are initially issuable upon conversion of the New
Convertible Notes.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibits are filed with this Current Report on Form 8-K:
Exhibit
No. Description
10.1 Form of Exchange Agreement.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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